Debates of Nov. 28th, 1995

Government Response To Petitions

[Alfonso Gagliano, Liberal, Secretary of State (Parliamentary Affairs) and Deputy Leader of the Government in the House of Commons]

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to 21 petitions.

Canada Remembers

[Lawrence MacAulay, Liberal, Secretary of State (Veterans)]

Mr. Speaker, on November 6, 1993 I had the privilege of announcing the Canada Remembers program. There have been literally hundreds of events commemorating events that led to the end of the second world war.

I had the privilege of leading a number of pilgrimages through Italy, France, Belgium and Holland. Indeed they were very touching events.

I remember standing outside Belgium with a number of Canadian veterans and marching into the city. In the city the people were singing "O Canada" and their greatest desire was to touch a Canadian veteran.

In Vlissingen, the Netherlands over 100,000 people came to say thank you to the allied veterans.

The most touching event for Canadian veterans was in Apledoorn where between 300,000 and 500,000 people came to say thank you to the Canadian veterans.

Now I have the privilege of leading a delegation to the far east, to Burma, Singapore, Hong Kong and Japan. In 1941 about 2,000 Canadians of the Winnipeg Grenadiers and the Royal Rifles left Vancouver for Hong Kong. More than one-quarter of these veterans died either on the battlefield or in prison camps.

About 10,000 Canadians served in the far east during the second world war, and over 1,000 paid the supreme sacrifice. We will be visiting a number of those graves in commemoration of these people. We will also be visiting memorials in Rangoon, Singapore and Yokohama. These memorials bear the name of the Canadian veteran who has no known grave.

In 1995 when we are looking ahead it is so important to look back to 1945 and really understand what price was paid for freedom and democracy. This pilgrimage is the last event for the Canada Remembers program. There have been so many events throughout this country from the largest provincial organization to the smallest community organization, all of which did nothing but add to the knowledge and the great respect we have for our Canadian veterans. These people can be justly proud and I thank them very much.

[Jean-Marc Jacob, Bloc, Charlesbourg, QC]

Mr. Speaker, I am pleased to speak this morning on behalf of the Bloc Quebecois concerning the pilgrimage to the far east which will be undertaken later this week by the secretary of state, along with several parliamentarians and a group of veterans. The purpose of that trip will be to provide the veterans with the opportunity to honour the memory of their fallen comrades in Commonwealth cemeteries in Hong Kong, Burma, Singapore and Japan.

It is important for the vital role played by our veterans in the defence of freedom to be properly commemorated, particularly this year, which marks the fiftieth anniversary of V-E Day. We have already had a number of opportunities to recall to mind the selfless sacrifice of the men and women to whom we owe our heritage of freedom and democracy. This morning I would like to again express our gratitude to all of those who laid down their lives, and all those who were prepared to lay down their lives, in defence of that cause.

Such was the price of our allegiance to the values of democracy and peace and it is precisely because our young servicemen shared those values that they fought to uphold them throughout the world. More than 100,000 young Quebecers and Canadians lost their lives during the two world wars, and many hundreds more in Korea and various peacekeeping operations.

Today, we want to honour, more specifically, the war effort of our veterans in Hong Kong and other parts of the far east during the second world war. Ten thousand fighting men and women served there, and nearly a thousand did not return home. As the secretary of state rightly pointed out, the war effort in the far east was primarily an air war. The battles there were vital to the triumph of freedom and democracy.

Our soldiers were actively involved in reconnaissance, transportation, fighter and bomber squadrons. RCAF air crews and ground crews supported Commonwealth land forces in the war in the Pacific. We want to express our heartfelt gratitude to them.

This pilgrimage is one of a number that have been made to different parts of the world, particularly Europe, where Canadians and Quebecers helped liberate Belgium, France, Italy and the Netherlands. The celebrations for V-E Day were particularly emotional.

The significant loss of human life and the horror of the suffering of our veterans in the far east, including all the members of Canada's troops of Chinese or Japanese extraction, must not be left to fade with time.

This heritage must be passed on to the very young. We are therefore delighted to learn that four young people will take part in the pilgrimage. They are at the same age that the veterans were when they left to defend our freedom.

The Bloc Quebecois is pleased to support this initiative.

[Jack Frazer, Reform, Saanich—Gulf Islands, BC]

Madam Speaker, I was 13 years old when the second world war ended; 9 when the Japanese bombed Pearl Harbour and the war in the Pacific commenced. Young as I was, with an aunt, an uncle and a cousin already in Canada's armed forces, Pearl Harbour impacted strongly on my family and on me.

For the men of the Winnipeg Grenadiers and the Royal Rifles the overwhelming numbers of Japanese attacking Hong Kong made the battle short but the ensuing years in prisoner of war camps long and arduous.

Overworked, underfed, exposed and vulnerable to tropical diseases and without adequate medical care, almost as many died in those camps as had been killed in the fight.

History tells us that the Japanese met their strongest resistance where men of the Royal Rifles and Winnipeg Grenadiers held the ground.

More than 500 of those who sailed for Hong Kong did not return. Those who did suffered abuse and deprivation which would affect them for the rest of their lives.

In the air, whether flying the hump in transport aircraft, in bombers carrying the fight to the enemy or in fighters defending our forces against enemy air attack, the Royal Canadian Air Force made a vital contribution to the successful resolution of that war.

I was delighted to see on the list of 40 veterans whom we will accompany on this pilgrimage the name of a pilot with whom I served during my career in the air force. Until I saw his name among the veterans I had no idea he had flown in that campaign. He is not one to trumpet his accomplishments. We have not seen each other for many years and I look forward with great anticipation to meeting him again. I look forward to meeting and coming to know all these veterans who gave so much for Canadians and the world during that difficult time.

1994 marked the 75th anniversary of the end of the first world war and the 50th anniversary of events leading to the end of the second world war. 1995 has seen ceremonies commemorating events late in the war and finally victory in Europe.

This pilgrimage on which we embark tomorrow will visit cemeteries where Canadians lie in Burma, now Myanmar, Singapore, Hong Kong and Tokyo.

I will take great pride in joining our veterans of those campaigns as we pay tribute to their many comrades who made the ultimate sacrifice and did not return.

Members Of Parliamentretiring Allowances Act

[Cliff Breitkreuz, Reform, Yellowhead, AB]

moved for leave to introduce Bill C-360, an act to amend the Members of Parliament Retiring Allowances Act (deduction re other income).

Madam Speaker, I thank my colleague, the hon. member for Prince George-Peace River, for seconding the bill.

It is a pleasure to introduce my private member's bill which calls for amending the Members of Parliament Retiring Allowances Act. Members opposite know how the Reform Party and indeed the overwhelming majority of Canadians feel about the rich MP gold plated pension scheme.

My private member's bill proposes to introduce an MP pension clawback which would apply to former parliamentarians. It would work on exactly the same principle as the old age security clawback applies to senior citizens. Former parliamentarians earning more than $53,215 in the private sector would have a portion of their MP pensions clawed back.

It is time for this kind of legislation. Canadians are calling for legislation which reflects fairness from their elected representatives.

I ask members from all parties to give serious consideration to this bill.

(Motions deemed adopted, bill read the first time and printed.)

Access To Information Act

[Bill Gilmour, Reform, Comox—Alberni, BC]

moved for leave to introduce Bill C-361, an act to amend the Access to Information Act (crown corporations).

Madam Speaker, my bill will make all crown corporations subject to the Access to Information Act. These would be corporations like the post office and CMHC. At present, these corporations are exempt from access to information even though they are subsidized with tax dollars. This bill will open corporations to the public and make them more accountable to Canadians.

(Motions deemed adopted, bill read the first time and printed.)

Parliament Of Canada Act

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

moved for leave to introduce Bill C-362, an act to amend the Parliament of Canada Act and the Canada Elections Act (confidence votes).

Madam Speaker, this bill if enacted would amend the Parliament of Canada Act and the Canada Elections Act.

It would end the uncertainty over when our general elections would be called. Provisions in this bill would call for the general elections to be held every four years. This would in no way contravene our Constitution. No constitutional amendments are required because the Governor General still has the authority to determine whether or not that election shall be called.

There are also amendments to the Canada Elections Act that would clarify when a byelection would be called. It would ensure that in constituencies where members no longer represent their constituents because they have either been appointed to the Senate, as we have seen in the past, or they have passed away, timely byelections would be called on fixed dates.

Provisions in this bill would come into play if there was a crisis thus giving the bill the flexibility to be very usable.

I ask that all members of the House give serious consideration to this bill. If the bill passes, we would know that the next general election would be held on October 20, 1997.

(Motions deemed adopted, bill read the first time and printed.)

Petitions

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, pursuant to Standing Order 36, I wish to present a petition which has been circulating all across Canada. This particular petition has been signed by a number of Canadians from Waterloo, Ontario.

The petitioners would like to draw to the attention of the House that managing the family home and caring for preschool children is an honourable profession which has not been recognized for its value to our society. They also state that the Income Tax Act discriminates against families who make the choice to provide care in the home to preschool children, the disabled, the chronically ill, or the aged.

The petitioners therefore pray and call upon Parliament to pursue initiatives to eliminate tax discrimination against families who decide to provide care in the home for preschool children, the disabled, the chronically ill, or the aged.

Questions On The Order Paper

[Jon Gerrard, Liberal, Secretary of State (Science]

Madam Speaker, I ask that all questions be allowed to stand.

[The Acting Speaker (Mrs. Maheu)]

Is that agreed?

[Some hon. members]

Agreed.

[The Acting Speaker (Mrs. Maheu)]

I wish to inform the House that pursuant to Standing Order 33(2)(b), because of the ministerial statement, government orders will be extended by nine minutes.

The House proceeded to the consideration of Bill C-99, an act to amend the Small Business Loans Act, as reported (with amendments) from a committee.

Small Business Loans Act

[The Acting Speaker (Mrs. Maheu)]

I will now read the Speaker's ruling.

There are six motions in amendment standing on the Notice Paper for report stage of Bill C-99, an act to amend the Small Business Loans Act.

Motions Nos. 1 and 2 will be grouped for the purposes of debate. The vote on Motion No. 1 will apply to Motion No. 5.

Motions Nos. 2, 4 and 6 will be grouped for debate. A vote on Motion No. 2 applies to Motions Nos. 4 and 6.

Motion No. 3 will be debated and voted on separately. I shall now put Motions Nos. 1 and 5 to the House.

[Yves Rocheleau, Bloc, Trois-Rivières, QC]

moved:

Motion No. 1

That Bill C-99, in Clause 1, be amended: a ) by replacing lines 24 and 25, on page 1, with the following: d ) ninety per cent, or such other percentage as is fixed by the committee of the House of Commons that normally considers matters relating to industry, of any loss sus-''; and b ) by replacing line 1, on page 2, with the following: c ) or, where a percentage is fixed by the committee described in this paragraph,''.

Motion No. 5

That Bill C-99 be amended by adding after line 32, on page 4, the following new Clause:

"4.1 The Act is amended by adding the following after section 7:

7.1 The committee of the House of Commons that normally considers matters relating to industry may, for the purposes of paragraph 3(1)( d ), fix the percentage of any loss that the Minister is liable to pay.''

-He said: Madam Speaker, thank you for your co-operation. Our set of amendments consists of three groups. There are six amendments, and I will now speak to Group No. 1, as agreed.

In this first group, there are two elements that reflect the spirit of our amendments. One concerns the change in coverage now provided under the act. The government currently guarantees 90 per cent of loans made under the Small Business Loans Act, but that same government now wants to cap coverage at 85 per cent.

The other aspect concerns our role as legislators, in Parliament and in committee. In clause 1(1)( d ), and we will get back to this later on, the government's share will be prescribed, and we feel that is wrong. To get back to the loan guarantees provided under the Small Business Loans Act, which will be reduced from 90 per cent to 85 per cent, a difference of 5 per cent, this means the government is in a way backing out, is reducing its contribution to this legislation, and this increases the lender's liability by 5 per cent.

The implications of this measure, although not dramatic, are nevertheless very serious, because there is a message here for small lending institutions, especially in Quebec where there is a credit union in every town. Since the risk to the lender increases, small lending institutions that do not provide more than 10, 15 or 20 loans per year may think twice. We fear that this may cause bank managers to be more cautious, to be psychologically inclined to direct loans to less risky businesses, because the lender will, in theory, still run a greater risk.

This, in our opinion, will cause banks to favour less risky businesses. This runs somewhat counter to the economic development needs of our society, which is increasingly focused on high-tech companies in preparing for the future. These companies represent a risk in themselves because, as we know, contrary to traditional businesses, high-tech companies often have nothing to reassure lending institutions because their operating strength is based on their owner-managers' knowledge and expertise, on intangible values, and not on the usual buildings or facilities.

Reducing government coverage indirectly penalizes high-tech companies, which represent an extra risk for the banks. This has already been clearly identified as a problem during the industry committee's proceedings, because we know that the banks are generally reluctant, perhaps with good reason, to finance these high-tech companies.

This, we also fear, will penalize new businesses without any experience or history that have not yet proven themselves. These businesses represent an extra risk for lenders. Reduced coverage will make it harder for them and for the banks to accurately assess the situation, since any banker knows that lending to a new, unproven business without annual statements for the previous years will make the matter even more difficult.

Perhaps I should have pointed out earlier that we should keep in mind that what this bill implies comes from the last speech of the finance minister, in which he suggested rather strongly that the Small Business Loans Act program should be self-financing.

This is the articulation of this political will. We members of the Bloc Quebecois realize that this is a legislation, a small business assistance program with a price. In 1993, bad debts that had to be absorbed by the federal government totalled $32 million and, with the envelop growing from $4 billion to $12 billion, losses could rise to $100 million.

There may be food for thought here, serious thought. That is what the official opposition has in mind when suggesting that,

before amending this act to limit its scope and introducing concepts such as self-financing, a cost-benefit analysis should be conducted to identify the benefits arising from this legislation. We at least need to know how many jobs are created, what the government's tax return on its investment is-since the loss incurred as a result of the implementation of this act could be likened to an investment-and what indirect taxes are indirectly created by the implementation of the act, taxes that otherwise would not have to be paid.

So, before the scope of this act is restricted, we in the committee would have liked, and that was part of our recommendations, to see a cost-benefit analysis. Unfortunately, the government did not follow our advice and is now going ahead by reducing, as we can see, coverage by five per cent.

The other aspect of Group No. 1, which is also found in Group No. 2, relates to clause 1( d ), which reads:

Subsection 3(1) of the Small Business Loans Act is amended by striking out the word "or" at the end of the paragraph (a) and by replacing paragraph ( b ) with the following: d ) eighty-five per cent, or such other percentage as is prescribed-

It is that "as is prescribed" provision that we object to and that we oppose. As you may have noticed, the official opposition-we all do-feels that the role of parliamentarians, including that of Parliament as legislator and that of the committees, is neglected and belittled. This bill should be a good opportunity to enhance the role of parliamentarians and committees, and this is why we condemn the fact that the government intends to resort to regulations.

All the polls show that we must enhance the role of elected representatives. We were elected through a democratic process, we have things to say, and we all represent our constituents. We are here to express their views. Yet, the system relies less and less on the expertise and sensitivity of parliamentarians. If we are not the ones who can influence decisions, then who can? It is the bureaucracy, the lobbies and those who have money, as the current Quebec premier so accurately pointed out in his review of the referendum results.

Given how much money circulates in our economic system, it is easy to see the power of money. That is confirmed once again. Indeed, if the government does not work openly with the institutions that we represent, than it works on the sly and resorts to its authority. With that provision, we will only find out after the fact that the government decided to change its coverage. By resorting to regulations, if the government wants to ensure self-financing and realizes that implementing the act is too costly, it can simply decide that its coverage will no longer be 85 per cent but, rather, 80, 75 or 70 per cent, without any discussion. All of us here will simply be put before a fait accompli, and that is not good for any self-respecting democracy.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Madam Speaker, I listened attentively to the member for Trois-Rivières. Quite frankly, there are some points the member makes that are quite valid. I would like to dwell on the first point for a couple of minutes, and that has to do with the reduction in the government's liability from 90 per cent on the small business loan guarantee to 85 per cent.

Last year the government liability for the Small Business Loans Act float was approximately $100 million. That is what it cost. Effectively, what we are doing with this amendment to the bill, which the Bloc does not support, is reducing the liability from $100 million to $95 million. In other words, by lowering the exposure of the government we are going to save $5 million.

The member for Trois-Rivières makes a very interesting point. Will that five per cent threshold cause banks to not look as hard or take as much of a chance with those smaller, more innovative, knowledge based firms? I am not sure that it will not.

Two weeks ago we heard in the industry committee that the small business float for all banks in Canada was $28 billion, a one per cent increase in the float over the year before. The banks of Canada that make loans under the Small Business Loans Act were guaranteed, prior to this legislation, 90 per cent of that loan by the crown. The float right now is around $4 billion to $5 billion. If we deduct that Government of Canada guarantee to the banks on those loans, then effectively we have not had a real increase in the small business loan activity in this country in the last two years.

We have to be very careful. I am not going to support the member's motion to reduce the crown's exposure. The member from Trois-Rivières wants the government to go on the hook for another $5 million. I am not going to support that. Because of the pressure from the Reform Party, our government is on a fiscal obsession with the deficit and the debt. I hope this path will head to a quicker economic recovery. But I share the view of the Bloc member for Trois-Rivières that we are going to have to be vigilant, because if we lower the government guarantee to the banks we may see a lot of good opportunities go by the wayside. The banks might not come to the party. We need small business going full throttle in the country.

I think the member's motion gives us an interesting concern, which we register. But we must at the same time balance our responsibility with reducing the cost of managing the program to the taxpayer. We will try it, and if we see that the activity on the Small Business Loans Act does not continue at the same rate or if there is not the same action on the Small Business Loans Act, then as a committee and as a government we can ask the minister to reopen the file. But we must give it a chance in the interest of fiscal restraint and make sure that the bill is focused on cost recovery.

I must say that the member for Trois-Rivières has done a fabulous job in the industry committee in the last two years. Instead of his party being called the Bloc Quebecois, I wish they were called the Bloc Canadien. If they were called the Bloc Canadien, then imagine the thrust we could get going in the House and the stimulation to the economy.

Who knows, once the current leader of the Bloc Quebecois moves to Quebec City perhaps we will get a conversion going and the Bloc can become the Bloc Canadien. I sense there are a lot of members in the Bloc who really do by and large share some of the values and some of the things we all aspire to in the House for all of Canada.

The second part of the member's point is about giving the industry committee the authority to amend this bill. That would be equivalent to changing the whole system of government. We all know our system of government gives the Prime Minister and his cabinet the executive responsibility to put legislation forward. We members of Parliament have the ability and the opportunity to provide input and to amend, as we are doing here today.

The reason we do not have any motions being put forward today by the Reform Party is because the motions and ideas of the Reform critic for industry were accepted in committee and have become part of the bill. It is not as if members of Parliament do not have the-

[Charlie Penson, Reform, Peace River, AB]

It was the first time.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

No, it was not the first time. We have accepted many of the good ideas of the member from Okanagan.

The point I am trying to make is the government would not abrogate to committees of the House its executive responsibility. The member for Trois-Rivières is asking the executive of the Government of Canada to just give its executive responsibility to the industry committee. We could not support such an idea, because ultimately the Prime Minister and the cabinet, the government, are responsible.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

They call the shots.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

That is right. We can have input, but that is the way we are governed in this country and that is the way it will have to stay.

[Werner Schmidt, Reform, Okanagan Centre, BC]

Madam Speaker, it is a pleasure to rise in the debate on this very interesting motion. In some ways it sounds very good in principle. In another sense, I have great difficulty with it.

I would like to review some of the provisions of the Small Business Loans Act itself and what it is doing. I noticed the hon. parliamentary secretary to the Minister of Industry alluded to the exposure of the government and the liability that is incurred on behalf of the government for the people of Canada under the Small Business Loans Act. It is rather substantial. Last spring the $4 billion ceiling was increased to $12 billion, which is a threefold increase. It is very interesting that at that time the government's liability was 90 per cent of that $4 billion, which works out to about $3.6 billion. That costs roughly $100 million a year in terms of the non-payment or the defaults on various loans.

The current amendment proposes to reduce the liability for the $12 billion ceiling to 85 per cent, which still means a liability for the government of approximately $11.2 billion or $11.3 billion. If that proportion of $100 million goes with a $4 billion ceiling, this could now go to $300 million with this new ceiling, which is pretty substantial. We have to be very careful about this.

We have to recognize that Professors Haines and Riding did a very interesting study about small business loans and what happens. The cap of the individual borrower under the Small Business Loans Act is now $250,000; it was $125,000. The ceiling or the size of the business has increased. It was limited to any business that had $2 million or less of sales on an annual basis. The new ceiling goes up to $5 million.

It is very interesting what this study of Haines-Riding showed. It showed that businesses below the $2 million ceiling had a default rate of somewhere between 7 and 8 per cent. Those with sales between $2 million and $5 million had a default rate of 14.7 per cent, which is much greater.

We can see the exposure under the new provisions, under the new ceilings, are rather interesting because they increase the risk to which the government has exposed itself.

To combat that the bill comes forward and says that there will be an administration fee. As we all know there is a 2 per cent registration fee right off the top which is added to the principal. Then there is a 1.75 per cent fee in terms of cost to make the costs of defaults and various other administrative items recoverable. It was not good enough that it resulted in a $100 million loss. That has been increased by another 1.25 per cent which means a total of 3 per cent. The 1.25 per cent can be recovered in only one way, and that is through interest rates.

The earlier situation was that the Small Business Loans Act used the prime rate that could be increased by 1.75 per cent. It went up to 6.75 per cent. Now it is 3 per cent above prime, which means that we will probably run the new small business loans under that provision.

To give us the context of what is happening, the liability of the government is increased under the Small Business Loans Act by about 300 per cent over what it was before. It is our responsibility as elected representatives of our constituents to protect their interests. If we are exposing their risk from $4 billion to $12 billion, it should not be delegated to the executive council of the government. It should be the responsibility of parliamentarians in the House of Commons.

The bill had the provision that it should be delegated to the executive council. We proposed an amendment. The hon. parliamentary secretary referred to the amendment in his presentation a few moments ago. It was accepted by the committee. It has now been taken out of the bill so that parliamentarians have control over fixing whether it will be 90 per cent or any other percentage. It is a real positive move for democracy.

When I look at the amendment before us I notice that it has been adulterated because it is neither fish nor fowl at this point. It is being proposed that parliamentarians in the House of Commons should not have control but the committee should have control. Admittedly the committee is made up of parliamentarians elected from all parties represented in the House. They are elected representatives of the constituents.

However when we are talking about $12 billion it is a lot of money. I do not think a committee should have the authority to make those kinds of decisions on behalf of Parliament. If we thought the executive council should not have that kind of power, it is much less that a committee of the House should have the authority.

While the direction of giving authority to the people is a good one and while the intent is noble, the way it is being proposed will not achieve what we really need. We need to recognize that as representatives who have been elected by the people we represent them in a threefold way. First, we represent them because of the party we are a member of that presented the candidates to the people. They knew we were to present certain things. I appreciate the parliamentary secretary's statement that gave us credit for the fact that the Reform Party is here to bring about an awareness of the fiscal responsibility and the need to get our house in order financially. That is absolutely superb. We need to do that.

The difference I have with the hon. member opposite is that it is not an obsession. That is a reality. That is something we have to come to grips with. It is high time that we do it just as soon as we can. If truth is an obsession it is time we were all obsessed because truth is what we need. That is the first point.

As we represent our people we have another responsibility to detect very clearly what they feel about certain kinds of issues. They want a voice and they have told us clearly that we have to get our financial house in order. That was not a mandate that we in the Reform Party said we would have, but the people told us quite independent of it being a Reform platform that it was what they wanted us to do.

Second, as representatives we actually go out and represent the people in what they think. Finally, we apply our best judgment to ordinary everyday housekeeping items where we do the things that have to be looked after.

This is a very critical and important issue. To put this into the context of only a one-industry committee is not enough. The whole House of Commons is involved in financial issues of major import affecting small business, the engine that generates about 85 per cent of new employment in Canada. It is the issue.

Also that group, especially the high tech group, is bringing about innovations to make our economy grow. There is no question that today we will move faster and faster not because we are so smart but because we bring about new innovations, new applications of new knowledge. That is what we need to do. The small business component is the absolute number one component in the economy that will help Canada grow to where it becomes a truly competitive industrial nation in the world. That is where we need to move.

I appreciate the opportunity the motion has given me to express some ideas although I oppose the motion not because we do not need to deal with small business and not because we do not need representatives of the people but because the method is wrong.

[Alex Shepherd, Liberal, Durham, ON]

Madam Speaker, it gives me great pleasure to enter the debate at report stage of Bill C-99, specifically Motions Nos. 1 and 5 brought forward by the member for Trois-Rivières.

I was interested in the member's speech. He discussed the need to defend lenders. It seems unusual to me. Sometimes when I look at the Small Business Loans Act the question that comes readily to mind is why the Government of Canada has to encourage and guarantee lending to small business, which is the obligation of our financial community.

I was very surprised to hear the member defending moving the guarantee from 90 per cent to 85 per cent. He defended the potential liability for another 5 per cent on these loans to lenders. The banks of the country have reported something in the neighbourhood of $1 billion worth of profits. It is apropos that as legislators and parliamentarians we are concerned about the small and medium size business communities and where they fit.

The question could well be why the guarantee is at 85 per cent. The intent of the legislation is to recognize a liability exists for the Government of Canada in terms of these loans. As far as I can understand, the guarantee has been amended to 85 per cent basically to allow more lending to occur. The growth in the SBLA program has been remarkable. In that sense it has been very successful in channelling investment loans to small and medium

size businesses. By leaving the guarantee at the 90 per cent level, loan losses could well exceed $100 million a year.

As we have heard from the hon. member from Okanagan the government is committed to reducing our expenditures and our risk to loss. He spoke about a maximum liability of something in the neighbourhood of $12 billion. That is erroneous. That kind of risk would be like giving somebody an $85,000 mortgage on a $100,000 house and expecting to lose the entire $85,000. Most of the small business community could look at that situation and realize it is an unrealistic assumption.

Most of the loan loss provisions that have resulted in losses to the government are somewhere in the neighbourhood of 2.5 per cent. That is not unreasonable in the lending business, which gets me back to my original question of why we cannot encourage our financial institutions to be more aggressive in lending to small and medium size businesses rather than require the federal government to guarantee the loans.

The hon. member mentioned a number of other issues, not the least of which was investment in new and emerging technologies. Certainly that is a good point. The history of the loans has been that they are used for capital additions to small and medium size businesses, basically equipment, real estate and so on. The aspect of new technology still befuddles the investment community generally. We need to look for new and different types of sources of capital for small and medium size businesses. I suspect small and medium size businesses and the SBLA program do not look to this source of capital to finance emerging technologies.

About a year ago I had the opportunity to tour the Royal Bank. I talked to some of the portfolio managers and listened to their concerns about emerging technologies. I still believe that the financial community has not come to grips with how to deal with emerging technology. It is still very much focused on the concept of security, based on what it was doing 10 or 20 years ago, looking for hard assets as security for the loans.

The most prevalent asset was real estate. I do not have to tell my colleagues what has happened in the real estate industry in the last five years. The banks, in an effort not to be burned twice, are getting back to using real estate as a security item, which has compounded the problems of small and medium size businesses. The banks are refusing to enter even traditional markets because they do not know from where they will get security.

Through the Small Business Loans Act the government has attempted to inspire financial institutions to come forward and lend to small and medium size businesses. Most businesses will be smaller, based on some of the changes to the act. When we are talking about sales of $5 million and so forth a lot of people in the riding of Durham do not think that is small business; they think it is big business.

The changes to the SBLA will allow it to be more focused on genuine small businesses. The question is how big businesses occur. They occur from the emergence of small businesses that are allowed to grow within the system. The Small Business Loans Act has really been a hand up for some small businesses. As the hon. member for Broadview-Greenwood suggested, it may well be the only hand up that exists between the financial sector and small and medium size businesses.

The second part of the motion deals with the possibility of having the industry committee approve changes in the guarantee aspect of these provisions. One thing that small business needs is flexibility and rapidity in decision making.

I question whether it is in the purview of the committee system to undertake this sort of review process knowing the heavy workload the committee constantly has in this place. I also question whether it is within the competence of the committee to make those kinds of decisions.

In order for the committee to change these kinds of guarantees it would need rapid and up to date information about the experience of loan losses. It would have to be able to understand emerging tendencies within the lending business.

I really question whether it would be a service to small and medium size businesses which would find a great lag in being able to have a flexible relationship with the government. I think the government is attempting to be very flexible in allowing this plan to emerge and foster support of small business.

In conclusion, I am opposed to both of these motions for the reasons I have mentioned.

[The Acting Speaker (Mrs. Maheu)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mrs. Maheu)]

The vote is on Motion No. 1. Is it the pleasure of the House to adopt the motion?